‘Super stealth tax’ looms via Spring Budget

By Jo Gilbert

Published: 14 March, 2023

Industry heads are warning that wine drinkers could face rocketing prices if the chancellor goes ahead with a double-pronged tax hike, likely to be announced at tomorrow’s Spring Budget.

When the government’s new alcohol duty regime comes into force on 1 August 2023 – which will broadly tax alcohol according to strength – some 90% of all still wine is set to see at least a 9% duty rise.

However, wine is facing inflationary pressures from another angle, too. If the chancellor, Jeremy Hunt, announces that the current freeze on alcohol duty will also end on 1 August and chooses to increase duty by inflation – for example 10% RPI, the most recent being 13.4% – wine drinkers will face a tax hike at least double that size.

Read more: Conservative Party members oppose wine tax hikes

The result could be the biggest single increase in almost 50 years, the WSTA says, and will ironically stoke the inflation that the Prime Minister has insisted his government must seek to control.

“The UK’s 33 million wine drinkers are blissfully unaware that the price of wine is set to rocket this summer,” Miles Beale, chief executive of the Wine and Spirit Trade Association (WSTA) said.

“If the chancellor goes ahead with a two-pronged attack on wine drinkers by adding an inflationary duty increase on top of the stealth tax already applied when the government’s new alcohol duty regime kicks in this summer, duty alone will add 44p to a bottle of still wine.

“If alcohol duty rates went up by RPI, this will be a crippling blow to the UK alcohol industry and consumers who will have to pay the price for tax rises during a cost-of-living crisis.”

The WSTA has calculated how the increases could affect consumers.

A 20% tax rise will mean duty on a bottle of still wine will rise by 44p. For fortified wines, the duty rises will be even greater with port set to rise by £1.29 a bottle.

Spirits are not exempt, either. Already the highest taxed alcoholic drink, spirits could also receive a 10% increase under the new tax structure, adding a further 75p to a bottle of vodka.

The WSTA maintains that freezing duty does not have a negative impact on Treasury revenues and says inflationary tax hikes will be a blow to both buisnesses and consumers, who are already struggling with the cost of living.

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